First Chicago Bank

First Chicago Bank was a Chicago-based retail and commercial bank tracing its roots back to 1863. Over the years, the bank operated under several names including The First National Bank of Chicago and First Chicago NBD (following its 1995 merger with the former National Bank of Detroit). In 1998, First Chicago NBD merged with Banc One Corporation to form Bank One Corporation, today a part of Chase.

History

Founding and early history

On July 1, 1863, banker Edmund Aiken and his partners invested $100,000 to found a new federally chartered bank that could take advantage of the National Banking Act of 1863, which allowed national banks to exist along with state-chartered institutions for the first time. First Chicago received National Bank charter No. 8.[1][2] The new bank known as The First National Bank of Chicago, or The First, grew steadily in the 1860s, financing the American Civil War.[3][4]

The First National clock is located at Exelon Plaza next to the Chase Tower in the Chicago Loop. The tower was called First National Plaza when it was built in 1969.

In 1903, the First opened the First Trust and Savings Bank which provided savings accounts to individual customers. First Trust and Savings Bank merged with Union Trust Company in 1928 to become the First Union Trust and Savings Bank. During the Great Depression, the First would absorb First Union Trust and Savings Bank's customers and operations. The bank was active in the sale of War Bonds during World War II. During the 1950s and 1960s the First expanded both in the Midwestern US as well as abroad, opening offices in London (1959), Tokyo (1962) and later Beijing (1980).[4]

First Chicago

A plaque located below the clock next to the Chase Tower (originally First National Plaza). It was dedicated in 1979.

In 1969 the bank was reorganized as the primary subsidiary of the new First Chicago Corporation, a newly formed bank holding company.[7] First Chicago was used as a brand name starting in 1969 and the bank moved into a new skyscraper in the Loop in Chicago (originally called First National Plaza, it is now known as Chase Tower). The bank grew consistently through the early 1970s, however, the bank's growth undermined its underwriting standards. By the end of 1975 and the beginning of 1976, non-performing loans at First Chicago had reached twice the national average for commercial banks at roughly 11% of all loans. Efforts to fix the bank failed and the bank struggled through the end of the 1970s, suffering from highly speculative bets on interest rates.[3][4]

Expansion beyond a single retail banking location was hindered for years. Not only was Illinois one of the last states to allow branch banking, but for years it did not allow holding companies to own more than one bank. First Chicago was not able to open its first branch bank until 1977,[8] when banks were allowed to open two limited banking facilities within 1,500 feet of the main office.

Management

During the 1980s, CEO Barry F. Sullivan, formerly with Chase Manhattan Bank, was able to turn around the bank in the early 1980s. Additionally First Chicago's private equity operations proved highly successful and served the incubator for a number of successful independent private equity groups. Stanley Golder, who built the group in the 1970s left the bank in 1980 to found GTCR. In the 1990s, the team, led by John Canning, Jr. would spin out of First Chicago to form private equity firm Madison Dearborn.[13] Midwestern private equity firm, Primus Capital was also founded by First Chicago private equity alumni.

Expanding out of downtown and into the suburbs

First Chicago began to expand for the first time into the northwest suburbs of Chicago with the acquisition of the Arlington Heights-based First United Financial Services, a bank holding company with five banks, in 1987.[14] The following year, First Chicago entered DuPage County by acquiring Gary-Wheaton Corp., another bank holding company.[4][15][16]

In 1989, First Chicago acquired the north Chicago-based Ravenswood Financial Corp. for $55.1 million. Ravenswood Financial's only bank was renamed First Chicago Bank of Ravenswood.[17] First Chicago also acquired the Winnetka-based Winnetka Bank for $21.6 million in stock.[18]

Most of the acquired banks were named First Chicago Bank of followed by the name of the geographical location. Illinois law did not permit the merger of most of the acquired banks into the First National Bank of Chicago until as late as 1993.[20]

Credit cards

To strengthen its credit card business, First Chicago acquired Delaware-based Beneficial National Bank USA in 1987 and renamed it FCC National Bank.[21][22][23][24]

Bank One

First Chicago once again began to suffer from the quality of its loan portfolio in the early 1990s and sought out a merger with the National Bank of Detroit, which at the time was the 18th largest bank in the US (First Chicago was the 10th largest bank). The $5 billion merger, completed in 1995, created First Chicago NBD Corporation, the 7th largest bank in the US with $72 billion of assets, and was also a leader in the issuance of credit cards. While NBD was the nominal survivor, the merged bank was headquartered in Chicago.

In April 1998 First Chicago NBD announced a $30 billion merger with Banc One Corporation of Columbus, Ohio. Bank One was also a leading issuer of credit cards through its First USA division.[3][4] Following the merger the company was renamed Bank One Corporation, headquartered in Chicago. The First Chicago and NBD names were retired in 1999. In 2004, Bank One Corporation merged into JPMorgan Chase & Co. and its subsidiary bank, then named Bank One, National Association, merged into JPMorgan Chase Bank, National Association.

^Cole, Robert J. (August 10, 1983). "Heller to Sell American National to First Chicago". New York Times. The Walter E. Heller International Corporation said yesterday that it had signed a letter of intent to sell its American National Corporation, owner of the American National Bank and Trust Company, to the First Chicago Corporation, owner of the First National Bank of Chicago, for $275 million.

^Bailey, Jeff & Hays, Laurie (January 2, 1987). "First Chicago To Buy a Bank For $247 Million --- Acquiring Beneficial Unit Would Allow Expansion Of Credit Card Business". Wall Street Journal (Eastern ed.). p. 1. (Subscription required (help)). First Chicago Corp. moved to expand its profitable credit card operations with an agreement to buy a Delaware bank, which has $1 billion in credit card loans, from Beneficial Corp. for $247 million. The purchase of Beneficial National Bank USA of Wilmington would expand First Chicago's big and profitable Visa and MasterCard business by nearly a third -- to about $4.4 billion in loans on about four million cards. At the same time, the move would give the Chicago-based parent company of First National Bank of Chicago a banking charter in a state that has been hospitable to credit card issuers... the Delaware bank would give First Chicago a safe haven in any event, as Delaware doesn't regulate interest rates or annual fees on credit cards. First Chicago is the fifth-largest U.S. charge-card issuer.Alternate Link via ProQuest.

External links

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